UPDATE - Wells Fargo Downgraded Google (GOOG) to Market Perform; Emerging Risks Counterbalance Core Strengths

UPDATE - Wells Fargo downgraded Google (NASDAQ: GOOG) from Outperform to Market Perform. Valuation range cut from $700-720 to $620-640.

Wells analyst said, "In 2012 we see a number of emerging headwinds that could counterbalance the positive secular growth drivers in the core business. Over the course of the year we see six emerging headwinds: 1) integration of Motorola Mobility, 2) tougher comparables, 3) potential for increased regulatory scrutiny, 4) conceivable increase in operating expense to support adjacent growth initiatives as it battles Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT) & Facebook, 5) negative impact from FX due to the stronger dollar, and 6) minimal room for multiple expansion. While we are very positive on many of the core fundamentals (Page as CEO, G+, Android adoption & monetization, search improvements, YouTube/Display) we now see the risk/reward profile equally weighted. From a stock perspective, we think multiple expansion is unlikely given inevitable margin decline due to Motorola Mobility (NYSE: MMI)."

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